Equitas Resources Corp. Signs Long Term Funding Term Sheet with Cartesian Royalty Holdings Pte. Ltd. for a US$6.0M Revolving Gold Prepayment Facility and Equity Finance Package


June 7th, 2016

Equitas Resources Corp. Signs Long Term Funding Term Sheet with Cartesian Royalty Holdings Pte. Ltd. for a US$6.0M Revolving Gold Prepayment Facility and Equity Finance Package

Vancouver, British Columbia, June 07, 2016 – Equitas Resources Corp. (“Equitas” or the “Company”) (TSXV: EQT) (US: EQTRF) (Frankfurt: T6UN) is pleased to announce that it has entered into a binding term sheet with Cartesian Royalty Holdings Pte. Ltd. (“CRH”), an affiliate of Cartesian Capital Group, consisting of a US$5 million revolving gold prepayment loan facility (“Gold Prepay”) and a US$1 million equity private placement investment (together the “Finance Package”).

Key Finance Package Points:

  • This funding is intended to cover the projected development and acquisition expenditure of Equitas for up to 5 years.
  • CRH will have board representation for as long as they have material involvement with Equitas. Equitas hopes to benefit from the breadth of their strategic and financial experience.

The equity portion raised is likely to be channelled towards exploration, grade control drilling, and other costs to prove up further gold resources at our flagship Cajueiro Project, and other prospects.

The debt financing aspect of the Gold Prepay provides protection against shareholder dilution. CRH has committed to be a long-term partner while we develop the Cajueiro Project.

The Finance Package is intended to help Equitas become cash-flow generative and to move towards its 5-year strategic goal of becoming a mid-sized gold producer.

Chris Harris, President and CEO of Equitas, states “we are very pleased to have agreed to this innovative financing with Peter Yu and the CRH team. Upon closing, the funding provided should secure the near- and medium-term growth plans of Equitas, and help us towards our goal to become a profitable, cash-flow generating, self sustaining mid-tier gold producer in Brazil, with a potentially significant development portfolio. We look forward to working together with Cartesian on building the value of Equitas for its shareholders”.

“CRH and Equitas share a similar philosophy in developing highly scalable gold assets with near-term production and low all-in sustaining costs,” said Peter Yu, Founder and Managing Partner of Cartesian Capital Group. “We are excited to be partners with Chris Harris and the team at Equitas in this unique opportunity in Brazil, and look forward to helping grow the business with a focus on efficient and profitable gold production.”

The Finance Package: - Highlights

The package consists of a US$5 million revolving secured gold prepay facility with a 5-year term, and a US$1 million equity private placement agreement.

  • US$5 million revolving secured Gold Prepay.

The Gold Prepay is a secured loan to be repaid in gold at a pre-agreed volume and price. For every US$1 million drawn down by Equitas, repayment will require 2,100oz Au if within 1 year of drawdown, or 2,300oz Au if repayment takes longer than 1 year but within 3 years. If the full US$5 million is drawn, repayments would range between 10,500 ounces of gold and 11,500 ounces of gold.

Drawdown is permitted on meeting development milestones. The first drawdown shall be for US$250,000 and must be advanced within 90 days. It will be advanced with the first US$250,000 equity private placement. After the first drawdown, the minimum loan drawdown size will be US$1 million.

Each drawdown has up to 36 months to be repaid, with payments starting after 6 months. Any repayments made within 1 year of drawdown can be re-drawn again, providing Equitas with a “revolving” potential borrowing capacity of over US$5 million.

Security is over the existing assets of Equitas, and any new assets that are funded for development by the Gold Prepay. There are constraints over raising further debt, or selling assets, unless CRH gives its approval.

A 0.5% Net Smelter Royalty (“NSR”) shall be receivable by CRH from the earlier of 42 months following closing, and the full repayment of the gold prepay facility. The NSR is payable on production from the existing Equitas assets at financial close, and on any new assets acquired or developed with the gold prepay funds. The NSR is fully re-purchasable by Equitas in stages for a total of US$4 million.

  • US$1 million equity private placement
  • Use of Proceeds:

The private placement is for Equitas units, each of which comprises one Equitas share and one Equitas warrant. Pricing is CDN$0.07 per unit. Shares are subject to an 18 month lockup from June 6, 2016. Warrants have a 24-month expiry following the closing date, a strike price of CDN$0.117 per share and are not subject to a lockup.

Equity issue timing will be:

  • US$250,000 on first gold prepay drawdown, on completion of the gravity plant, and
  • US$750,000 on second drawdown under the Gold Prepay for the first Carbon-in-Leach (“CIL”) plant.

An upfront loan establishment fee of 2% of the full finance package, i.e. an amount of US$120,000 will be issued to CRH in Equitas units on first closing.

The proceeds of the Gold Prepay will be focused on our near- and medium-term development programme, including the proposed CIL intended to be developed later this year, as well as overhead costs. The proceeds of the equity placement are intended to be applied to future exploration, overhead costs, and new projects.

The Gold Prepay and the equity placement are both subject to definitive documents being completed and to TSX Venture Exchange approval.

About Cartesian Capital Group

Cartesian Capital Group, LLC is a global private equity firm with proven expertise in assisting closely-held companies develop into global market leaders. Cartesian manages more than $2.4 billion in capital and has offices in New York, Sao Paulo, Shanghai, Warsaw, and Bermuda.

For more information on Equitas Resources Corp., please contact Sean Kingsley, Corporate Communications at 604-681-1568 or skingsley@equitasresources.com.

On Behalf of the Board of Directors,
EQUITAS RESOURCES CORP.

“Chris Harris”
Chris Harris
President & CEO

Tel: 604-681-1568

info@equitasresources.com

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

Forward-Looking Statements

This News Release includes “forward-looking statements” as that term within the meaning of securities laws of applicable jurisdictions. Forward looking statements in this news release include that we will agree upon and sign definitive agreements for a gold loan and equity financing from CRH; that the funds will be sufficient for us to develop our properties for up to 5 years; that we will become gold producers; that we will generate cash flow and become profitable; that we will benefit from CRH’s involvement in our company; that we can attain TSXV approval; that we will produce sufficient gold to repay our loans; that we will meet conditions to draw down the gold loan and have the equity invested; and that we will use the funds as intended. Risks, uncertainties and other factors may cause Equitas Resources Corp.’s actual results, performance, production or achievements to differ materially from those expressed or implied by the forward-looking statements (and from past results, performance or achievements). These factors include, but are not limited to, the failure to sign agreements with CRH or the failure to obtain TSXV approval; the failure to complete and commission the mine facilities, processing plant and related infrastructure in the time frame and within estimated costs currently planned; variations in global demand and price for gold; fluctuations in exchange rates between the U.S. Dollar, the Brazilian Real and the Canadian dollar; the failure of Equitas Resources Corp.’s suppliers, service providers and partners to fulfil their obligations under construction, supply and other agreements; unforeseen geological, physical or meteorological conditions, natural disasters or cyclones; changes in the regulatory environment, industrial disputes, labour shortages, political and other factors; the inability to obtain additional financing, if required, on commercially suitable terms; and global and regional economic conditions. Readers are cautioned not to place undue reliance on forward-looking statements. The information concerning possible production in this announcement is not intended to be a forecast. They are internally generated goals set by the board of directors of Equitas Resources Corp. The ability of the company to achieve any targets will be largely determined by the company’s ability to secure adequate funding, implement mining plans, resolve logistical issues associated with mining and enter into any necessary off take arrangements with reputable third parties. Although Equitas Resources Corp. believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements.

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