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Chieftain Metals Corp. Announces Term Sheet for Bridge Loan Financing for up to $18.5 Million

June 9, 2014



ENP Newswire - 09 June 2014

Release date- 06062014 - TORONTO, ONTARIO - Chieftain Metals Corp. (TSX: CFB) is pleased to announce that its wholly-owned subsidiary, Chieftain Metals Inc., has accepted a term sheet for a secured and syndicated loan facility with West Face Capital Inc., as agent for West Face Long Term Opportunities Global Master L.P., a fund managed by West Face Capital.

The Bridge Loan has been structured as a 24 month secured facility to be made available to the Company in two tranches with an interest rate of Libor plus 15%. Upon completion of the Bridge Loan, a copy of the agreement will be available for review on Chieftain's SEDAR profile at www.sedar.com.

Proceeds from the first tranche in the amount of $7.5 million will be used to update the Company's 2012 feasibility study (the 'Feasibility Update') relating to the construction of a mine at the Tulsequah Chief orebody (the 'Project') and for general corporate purposes. The first tranche will be issued at 98% of the principal amount.

The second tranche provides the Company the ability to draw the Canadian dollar equivalent of US$10 million, if needed, to repay amounts owing under the silver and gold purchase agreement dated as of December 22, 2011 (the 'Streaming Agreement') with a subsidiary of Royal Gold, Inc. ('Royal Gold') in the event the Company and Royal Gold cannot reach an agreement to extend or modify the terms of the Streaming Agreement.

Unless renegotiated, the Company has the obligation to repay, on December 22, 2014, the US$10 million advanced by Royal Gold in December 2011 under the Streaming Agreement. A commitment fee of 2% of the second tranche principal amount is payable at closing.

The Bridge Loan is subject to definitive documentation, an intercreditor agreement between West Face Capital and Royal Gold and the prior receipt by Chieftain of disinterested shareholder approval pursuant to the requirements of the Toronto Stock Exchange.

The Feasibility Update is expected to incorporate improvements to the Project including (a) optimizing the production configuration, cost of capital, operating costs and mill size; (b) reconfiguring the copper circuit to produce two copper concentrates rather than one, thereby improving marketability of the copper concentrates in aggregate and (c) the addition of proven reserves to the mine plan. Chieftain expects the Feasibility Update will be completed by the end of the third calendar quarter of 2014.

Mr. Victor Wyprysky, President and CEO stated, 'We are pleased to announce this financing which will provide us with the necessary funding to complete the Feasibility Update, cover operating costs through 2015 and satisfy potential obligations under the Streaming Agreement. We expect that the Feasibility Update will reflect lower capital costs, resulting in enhanced projected investment returns and will greatly improve the project's financeability'.

Related Party Transaction

West Face Capital is a related party to Chieftain by virtue of its substantial shareholdings in Chieftain. Accordingly, the Bridge Loan is a 'related party transaction' as that term is defined under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ('MI 61-101'). A formal valuation of the Bridge Loan is not required as the transaction does not fall under paragraphs (a) through (g) of the definition of a 'related party transaction'.

As well, the Bridge Loan is exempt from the minority approval requirements of MI 61-101 as (i) the Bridge Loan was made on reasonable commercial terms that are not less advantageous to Chieftain than if it were obtained from a person dealing at arm's length with Chieftain and (ii) neither the Bridge Loan (and advances thereunder) nor the principal and interest payable thereunder are convertible, directly or indirectly, into equity or voting securities of Chieftain or its subsidiary or are otherwise participating in nature.

A material change report in respect of the Bridge Loan will be filed less than 21 days before the closing of the transaction which Chieftain considers to be reasonable and necessary given the time required to conclude definitive documentation and the need to improve Chieftain's financial condition in a timely manner.

TSX Matters

The Bridge Loan is subject to the disinterested shareholder approval requirements of section 501 of the TSX Company Manual as (i) Chieftain is a 'non-exempt' issuer pursuant to the rules of the TSX; (ii) West Face Capital is an insider of Chieftain as it owns or controls 24.8% of Chieftain's outstanding shares and is excluded from voting and (iii) the maximum cash fees and interest payable over the term of the Bridge Loan are greater than 10% of the current market capitalization of Chieftain.

About West Face Capital Inc.

West Face Capital is one of Canada's leading alternative investment managers with approximately $2.9 billion in assets under management. West Face Capital is active in a wide range of strategies, including providing bespoke capital solutions to companies with unique opportunities. West Face Capital's capabilities are underpinned by a seasoned multi-disciplinary investment team, proprietary origination channels and deep sector expertise, both domestically and internationally.

About Chieftain

Chieftain Metals Corp. is a public holding company, whose principal business is the acquisition, exploration and development of mineral properties. Chieftain's business has focused on the development of the Tulsequah Chief deposit located in north-western British Columbia, Canada. Chieftain's properties consist of 59 mineral claims and Crown-grants covering approximately 32,403 hectares including two previously producing mines.

Contact:

Chieftain Metals Corp.

Victor Wyprysky

President & CEO

Tel: (416) 479-5411

Pompeyo Gallardo

Chief Financial Officer

Tel: (416) 479-5412

Cautionary Statement Regarding Forward-Looking Information

This press release contains forward-looking information. All statements, other than statements of historical fact, are forward-looking and can be identified by the use of future-oriented words and phrases including without limitation 'may', 'will', 'could', 'subject to', 'expects' and variations and negatives thereof.

The forward-looking information included in this press release include statements with respect to: the obtaining of disinterested shareholder approval by Chieftain in order to fund advances under the Bridge Loan and the intended use and sufficiency of proceeds therefrom; Chieftain's potential obligation to repay deposited amounts under the Streaming Agreement to Royal Gold; the improvements expected to be made to the Project by the Feasibility Update and the expected timing of the completion of the Feasibility Update.

Forward-looking information contained in this document is based on the opinions and estimates of management as well as certain assumptions considered by management to be reasonable and which are made as at the date the information is given (including, in respect of the forward-looking information contained in this press release, assumptions regarding Chieftain's ability to obtain regulatory approval for the funding of advances under the Bridge Loan, the expected cost of funding and the timing requirements to complete the Feasibility Update and the projected working capital requirements of Chieftain, the potential obligation of Chieftain to repay amounts under the Streaming Agreement, and assumptions and factors regarding Chieftain's mineral properties which management expects to be supported by the Feasibility Update).

Readers should be cautioned that forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information.

Material risks include without limitation: that Chieftain may not be able to obtain disinterested shareholder approval or obtain regulatory approval to fund advances under the Bridge Loan, or that funding conditions under the Bridge Loan will not be met; the cost and timing of the Feasibility Update may exceed management's expectations and/or may not result in the optimizations to the Project expected by management; advances under the Bridge Loan may be insufficient to address the intended use of proceeds as expected by management, inherent risks involved in the exploration and development of Chieftain's mineral properties, volatility of metal prices and other factors.

Readers are cautioned to not place undue reliance on forward-looking information because it is possible that predictions, forecasts, projections and other forms of forward-looking information will not be achieved by Chieftain. The forward-looking information contained herein is made as of the date hereof and Chieftain assumes no responsibility to update or revise it to reflect new events or circumstances, except as required by law.


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Source: ENP Newswire


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