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Gowest Gold settles default allegations

Company secures new investor for Bradshaw gold project
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Development at Gowest Gold’s Bradshaw deposit near Timmins. (File photo)

Gowest Gold and PGB Timmins Holdings LP have reached a settlement regarding the alleged default of a 2016 financing agreement.

In 2016, PGB, an investment vehicle controlled by Pandion Mine Finance LP, agreed to provide US$17.6 million in financing – under a pre-paid forward gold purchase agreement – with the funds going towards Gowest’s development of the Bradshaw deposit near Timmins.

On Aug. 9, 2019, PGB alleged that Gowest defaulted on terms of the agreement, and notified Gowest it was terminating the contract and intended to collect what it was owed.

Gowest said it disagreed with the allegations levied by PGB, and noted that PGB has funded only US$5.6 million of the funds promised under the agreement.

Among the terms of the settlement, Gowest must pay PGB US$9 million in cash – including US$1.5 million by Aug. 20 and another US$7.5 million by Oct. 16.

The company must also pay PGB 3,500 ounces of gold produced from Bradshaw at a rate of 15 per cent of gold as produced.

Greg Romain, Gowest’s president and chief executive, applauded the settlement.

“The achievement of a settlement with PGB provides the company with the certainty necessary to move forward and to seek alternate financing solutions – in particular given that the Bradshaw project has been considerably de-risked since the agreement with PGB was initially entered into,” Romain said in an Aug. 19 news release.

“We will ultimately come out of this process in a better position for shareholders and all other stakeholders as we continue to advance Bradshaw towards commercial production as quickly as possible.”

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A memorandum of understanding has been drawn up with a new, third-party investor that has agreed, subject to conditions, to acquire all of PGB’s right, title and interest under the original agreement.

Gowest’s Bradshaw deposit is located 32 kilometres northeast of Timmins and currently still in development.

It contains a National Instrument 43‐101 indicated resource estimated at 2.1 million tonnes grading 6.19 grams per tonne gold, containing 422,000 ounces gold, and an inferred resource of 3.6 million tonnes grading 6.47 grams per tonne gold, containing 755,000 ounces of gold.




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