Gold Torrent Canada Inc. Update

BOISE, IDAHO: May 16, 2018 - Gold Torrent Canada, Inc. announces that it has been seeking new equity funds to advance the project and on May 15,2018 Gold Torrent was required to either close at least US$4.5 million in new equity financing and issue subscription receipt certificates to the subscribers or return their funds. Gold Torrent had only US$2.7 million in investor subscriptions.  As such, the company was unable to close the financing and is in default under the project finance arrangement with Cartesian Royalty Holdings. 

Cartesian has confirmed their willingness to a workout with Gold Torrent regarding the Lucky Shot project.  Based on our numerous investor meetings over the past 6 months, we believe the way forward is to team up with strategic investors, perhaps through a combination of debt and equity, to acquire Cartesian’s interest, and move forward with the execution of the business plan enhanced by additional exploration upfront. We’re currently talking to several groups who have been signaling their interest in doing so for several months. We remain hopeful that a solution can be arranged that works for Cartesian and Gold Torrent and its current shareholders.


In mid 2016, the Company began negotiations for a US$11.25 million streaming investment into the Alaska Subsidiary plus a US$2 million convertible note with Gold Torrent for the development of the Lucky Shot project. Gold Torrent had already invested US2 million into the project for  permitting, studies, engineering, planning and annual assessment work and lease payments. The Cartesian note was funded in late 2016 and its proceeds were used to build a professional and operating staff, complete engineering work and secure required operating permits of the project.  Then in early 2017, the US$6.5 million Tranche 1 was drawn from the stream funding by the Alaska subsidiary and construction of a new metal building was initiated.  Various pieces on inning equipment and supplies were purchased and a dining contractor was hired to refurbish the existing Enserch adit and portal area.

Terms of the stream and note provide Cartesian with a fully collateralized position including a deed of trust over the assets present and future until the stream is repaid by delivery of 28,000 ounces of gold.  Cartesian’s US$4.75 million Tranche 2 had a drawdown drop-dead date of March 31, 2018 that was subsequently extended to September 30, 2018 provided that by May 15, 2018 at least US$4.5 million was raised and by September 30, 2018 at least US$6.5 million was raised.


Hundreds of investor meetings were completed starting late December 2017 to current, including meetings in Toronto, Vancouver, Hong Kong, Shanghai, Beijing and Singapore.  In addition, we have engaged brokers, on a success basis, in Melbourne, London, Vancouver, Shanghai and Singapore. We conducted meetings with large and small institutional funds, junior and mid-tier mining companies who may have a future development interest, speculative investors, and retail investors both sophisticated (completing due diligence) and non-sophisticated retail investors. The efforts were focused on raising US$11 million dollars which, when combined with the other available funds including the US4.75 million Tranche 2, would have provided the balance of funds needed to achieve commercial production. 

This new capital raise requirement was caused by a 2017 review of the independently prepared 2016 Preliminary Feasibility Study capital cost estimates and the determination that, due to increased skilled labor costs, additional detailed design, and increased contingencies, they were inadequate to achieve the stated production goals.  In addition, our minority partner could not meet its US$5 million cash call and chose to dilute.  This meant that Gold Torrent needed to raise the minority partner’s US$5 million plus our own. When the capital cost budget was increased by the JV partners in October 2017, Cartesian elected not to allow draw down of Tranche 2 until the additional equity was secured. The suspension of that funding required Gold Torrent to suspend its activities at the project and curtail the cash burn.  Efforts included terminating the mining contractor and reducing the associated staff and expenditures that were underway to achieve production.  The cash burn rate was reduced but the suspension has eaten up all of Gold Torrent’s cash.  

The new capital raise could not begin until the SEC completed its review of the S-4 filing needed to re-domicile to Canada.  The SEC finally completed its review after 4 months and Gold Torrent was finally able to offer subscription agreements to US investors in mid-February 2018.  Early interest resulted in verbal commitments of about US$5 million. Under full disclosure requirements, our offering documents laid out the Cartesian financing details including the March 31, 2018 Tranche 2 deadline, the size of the production planned, the NI 43-101 resources and reserves, and the development timetable and plans.  

As the CRH Tranche 2 March 31, 2018 deadline approached, Gold Torrent worked out an extension of the drawdown date with Cartesian to May 15 which included splitting the capital raise into 2 stages. First stage required Gold Torrent to raise US$4.5 million and the second stage required Gold Torrent to raise US$6.5 million by September 30, 2018.  The CRH US$4.75 million tranche 2 would be available September 30 only if the two stages of capital raises were successful. 

This extension was made after an earlier agreement to adjust the 18% stream percentage to 20% because the delivery dates for gold to Cartesian under the original agreement were expected to be delayed.  


There are a number of objections/issues to the escrow financing presented by prospective investors (each with their own focus either on producers, explorers or gold bugs):

The Cartesian debt facility provides too much risk to new equity investors, with the risk of foreclosure hanging over the project assets.  The 26.8% royalty rate is too high (5.8% for underlying land owners and 20% for Cartesian). Splitting the capital raise into 2 stages raised the risk that the 2nd stage will be difficult, and probably at a lower share price than the current offering price, given that no new significant value-add increase in gold resources can occur in 4 months. 

The production scenario of 25,000 ounces per year is relatively small and may not make in impact in the market place as a TSXV listed company particularly given that gold reserves of 87,000 ounces means a 3.5-year mine life. The production of 18,500 ounces of gold per year must pay for the cost of producing 25,000 ounces per year. After considering contingencies the free cash flow may be insignificant in the market. The prospective investors suggested to try exploring for a few years to increase resources to expand mine life.

Exploration versus production: a significant number of investors wanted to fund an “exploration-only” plan because they view value creation from drilling with more upside potential compared to small-scale production.   


We were unable to close the financing by May 15, and have instructed the agent to return the escrow funds to subscribers. 

About Gold Torrent, Inc. 
Gold Torrent is an exploration and development company with a key project located in Alaska, USA. Gold Torrent's priority is to develop and advance the Lucky Shot Gold Project, ultimately resulting in gold production, and an increase in value for shareholders. Gold Torrent continues to pursue high-grade gold opportunities in safe mining jurisdictions.

This press release is neither an offer to sell, nor a solicitation of offers to purchase, securities.

Forward Looking Statements: This news release contains forward-looking statements regarding future events and Gold Torrent's future results that are subject to the safe harbors created under the U.S. Private Securities Litigation Reform Act of 1995, the Securities Act of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and applicable Canadian securities laws. Forward-looking statements include, among others, estimates of resources. These statements are based on current expectations, estimates, forecasts, and projections about Gold Torrent's exploration projects, the industry in which Gold Torrent operates and the beliefs and assumptions of Gold Torrent's management. Words such as "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," "continues," "may," variations of such words, and similar expressions and references to future periods, are intended to identify such forward-looking statements. Forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, including such factors as the results of exploration activities and whether the results continue to support continued exploration activities, unexpected variations in ore grade, types and metallurgy, volatility and level of commodity prices, the availability of sufficient future financing, potential changes to royalties and taxes imposed by the Alaska government and other matters discussed under the caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2017, and our other periodic and current reports filed with the SEC and available on Readers are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those expressed or implied in the forward-looking statements. Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. The Company undertakes no obligation to update or revise such forward-looking statements to reflect new information, events or circumstances occurring after the date of this press release.