What you need to know: • Trigon provided an update on the previously proposed acquisition of the Kombat Mine by Horizon Corporation. • Subject to final negotiation and approvals, the acquisition will consist of $30M plus between $10-20M in additional payments based on specific operational milestones. • TM also announced it has signed a binding loan agreement with Horizon for up to $5M to allow for the project to continue to advance. Yesterday after market close, Trigon Metals (TM:TSXV) provided an update regarding the proposed acquisition of Trigon’s interest in the Kombat Mine. Within the update, TM announced it has signed a binding loan agreement for the $5M loan from Horizon. Pursuant to the loan agreement, TM has granted Horizon exclusivity rights to negotiate the purchase of TM’s interest in Kombat. More clarity was provided with regards to the proposed transaction, stating the acquisition will be at a valuation of $30M (C$0.97/fully diluted share) plus follow-up payments ranging from $10M-20M based on operational milestones. We are maintaining our BUY rating and our C$1.50/share target price on TM. Terms of Proposed Acquisition This release provided additional clarity to the terms of the agreement stating that Horizon will purchase TM’s 80% ownership in the Kombat mine for $30M pending shareholder approval. Following this, TM will retain a 1% net revenue royalty on copper production if the mine produces over 1,000t per month for two consecutive months. Thereafter, TM will receive 1% of net copper revenue when the invoiced copper price is greater than $4.00/lb, payable quarterly for 20 quarters. Importantly, there are two additional milestone payments of $10M each when underground production exceeds on average 2,250tpd over 90 days and also once the streaming copper royalty reduces as per the Sprott streaming agreement. We believe that given the interest and capital that Horizon’s will be putting into the project, that these milestones will be met. Figure 1 below breaks down the specifics of the proposed agreement and milestones. Loan The $5M loan will be issued in three tranches to provide development capital for the Kombat Mine. Tranche 1 will be comprised of $500K within 7 days of signing the agreement, tranche 2 will be $2M within 7 working days of completing the security agreements and approvals relating to the loan, and tranche 3 will be $2.5M within 45 days of the second tranche payment. The loan will have a grace period of 6 months and then consist of 18 equal payments from the end of the grade period to the end of the 2-year term at an interest rate of 15%. Returning Capital to Shareholders Within today’s release, Trigon mentioned its intention to return a meaningful portion of the proceeds from the transaction back to the market in the form of share buybacks, dividends or a combination of the two. This marks as a meaningful catalyst for shareholders as we foresee a potential dividend being of substantial size.