Golden Queen Mining Consolidated Ltd.

Golden Queen Mining Consolidated Ltd. deregistered its securities, ending its obligation to file reports with the SEC.

listing compliance notice

On May 22, 2019, Golden Queen completed the sale of Golden Queen Mining Holdings, and with it the 50% interest in the Soledad Mountain mine, to Clay-family purchasers, after shareholders approved it on May 13 (including a majority of non-purchaser votes). In return it received US$4.25M cash and release of about US$26.6M of debt, and the purchasers' options and warrants are cancelled and their 177,701,229 shares are to be surrendered for cancellation (still in progress). The company says it now holds no operating business or assets other than cash; it plans to look for a new business, consolidate shares 10-for-1, rename to Golden Queen Mining Consolidated Ltd. and move its listing to the NEX board. A contingent payment of 20% of net proceeds above US$55M applies if the project is sold before June 30, 2020. This resolves the sale and loan-default threads; the amendment extended the outside date to May 22, 2019.

asset acquisition disposition

Q1 2019 results: 12,032 oz gold produced, revenue US$16.979M, net loss attributable to the company US$2.3M, and cash of US$6.683M at March 31 (100% project basis). The company states it cannot repay the November 2017 loan and faces significant insolvency risk; if shareholders reject the sale of Golden Queen Mining Holdings (which holds the 50% of the mine) to Clay-family purchasers, the loan falls due and the release says bankruptcy would likely mean total loss of equity value. The sale terms are US$4.25M cash, extinguishing about US$27.0M of debt owed to the purchasers, and cancelling 177,701,229 shares, 457,500 options and 18,000,000 warrants, plus a possible contingent payment; the vote is set for May 13, 2019. This is a results release, not the sale closing.

asset acquisition disposition

This filing gives the formal terms of the October 12 US$20M revolving facility to the Soledad mine subsidiary: 8% interest (plus 2% on default), a 1% commitment fee on the undrawn amount, a first-priority security interest over the subsidiary's assets, and pledges of both partners' membership interests in it. The company also amended its US$31M-era Clay term loan to add a cross-default to the new facility and reaffirmed its guaranty and pledge. Thomas M. Clay, CEO and director, is trustee of two of the term-loan lenders, and the LTC lender holds 75% of Auvergne, a lender on the new facility; he declared his interest. The filing says the 46% dilution if the warrants are exercised may affect accounting for the subsidiary.

material agreement

Golden Queen announced that its 50%-owned operating subsidiary, Golden Queen Mining Company LLC, agreed a US$20 million revolving credit facility with its partners in the JV, Gauss Holdings (owned by Jefferies Financial Group) and Auvergne (owned by Clay family members). The facility matures March 31, 2020 at 8% interest, and US$5 million has been drawn for working capital. Lenders also received warrants for 7.5% of the subsidiary on a fully diluted basis, which would cut the company's stake to 46.25% if exercised and may change how the subsidiary is accounted for. The release also reported Q3 2018 production of 12,943 oz gold and 121,843 oz silver, and the highest quarterly mined gold grade since operations began (0.026 oz/ton).

production update

On November 10, 2017 Golden Queen signed a Standby Guarantee Agreement with the Landon T. Clay 2009 Irrevocable Trust and The Masters 1, LLC, who agree to buy any shares in a proposed rights offering that existing holders do not take up. They would earn a fee of 3% of gross proceeds on the maximum offering (excluding certain Clay-held rights), estimated at about US$525,000. The company can terminate the rights offering before rights are issued, and the buyers' obligation depends on conditions including TSX acceptance. The standbys together control 30,926,536 shares; the filing gives no offering size or price.

capital raising announcement

On November 21, 2016 Golden Queen replaced the Clay family's US$37.5M loan due Dec 8, 2016 with a new US$31M loan due May 21, 2019 at 8% interest (down from 10%), with 2017 interest payable in kind if elected. It prepays the old loan down to US$31M (the balance from cash on hand), paid a US$930,000 closing fee, and issued the lenders 8,000,000 warrants at US$0.85. The loan remains guaranteed and secured by the pledge over the subsidiaries and the 50% GQ California interest. This resolves the December 2016 maturity thread; warrants add potential dilution, and the filing identifies Thomas M. Clay as CEO and a director.

capital raising announcement

The unit offering closed July 25, 2016: 11,120,000 units sold at C$1.45 for C$16,124,000 gross, including the full over-allotment of 1,450,000 units. Each unit carries half a warrant at C$2.00 expiring July 25, 2019, and a warrant indenture was signed with Computershare. The company plans to use proceeds for partial repayment of the loans due December 2016 and general purposes, so this resolves the offering thread; shareholders are diluted by the new shares and warrants.

material agreement

On July 18, 2016 Golden Queen signed a formal underwriting agreement with Cormark (and M Partners) replacing the bought deal letter, and raised the offering to 9,670,000 units at C$1.45 (about C$14 million), with an over-allotment option for 1,450,000 more units. Closing was expected around July 25, with proceeds for partial repayment of loans due December 2016 and general corporate purposes. Existing shareholders face dilution from the new shares and warrants.

material agreement

On July 14, 2016 Golden Queen signed a bought deal letter with Cormark Securities to sell up to 8,970,000 units at C$1.45 each, each unit being one common share plus half a warrant exercisable at C$2.00; the July 13 press release described it as a C$13 million financing. The company says it intends to use the proceeds to repay loans due in December 2016 (the Clay loan in the context) and for general corporate purposes. This is the offering announced in the earlier shelf and prospectus filings; underwriters get a 6% cash fee and warrants.

material agreement

On March 24, 2016 the audit committee concluded that 2014 deferred taxes were wrongly accounted for, so the 2014 annual accounts and the Q3 2014 and first three 2015 quarterly accounts should no longer be relied on. The error was missing a US$12,922,000 deferred tax liability from the gain on the 2014 joint venture deal, offset by a matching US$12,922,000 cut to additional paid-in capital; the filing says cash flows and reported losses were unaffected and no cash tax is payable. A material weakness in tax accounting controls was identified, and the company says it fixed it by hiring a US tax expert. The press release also reports a 2015 loss of $5.5 million ($0.05 per share), cash of $37.6 million and a $7.7 million working capital deficit, with commercial production anticipated in 2016.

financial restatement

On June 8, 2015 Golden Queen enlarged its Clay family term loan from US$12.5 million to US$37.5 million, with four notes at 10% now due December 8, 2016 and a US$1.5M closing fee. Proceeds are to repay the US$12.5M loan due July 1, 2015, repay the CAD$10 million convertible debentures due July 26, 2015, and fund a capital contribution of up to US$12.5M to the joint venture due June 15, 2015. The Clay lenders also received warrants for 10,000,000 shares at US$0.95 and an indemnity, so the debt grows and potential dilution is added, while the near-term maturities are pushed out. This closes the convertible debenture thread by repayment.

capital raising announcement

On December 31, 2014 Golden Queen borrowed US$12.5 million from Clay family lenders (a trust and Harris Clay) at 10%, due July 1, 2015, with a US$1M closing fee. About US$11M of it repaid the earlier Clay family loan that was due January 1, 2015, and the rest is for expenses and general purposes. The loan is guaranteed by GQ Holdco and secured by a pledge of Golden Queen's interest in GQ Holdco and its 50% stake in the joint venture; the lenders also got registration rights over Clay-held shares. This is another related-party loan (director Thomas Clay's family) and rolls over the January 2014 Clay debt.

debt financing

On September 15, 2014 the Soledad Mountain joint venture agreed in June closed: Gauss (owned 67.5% by Leucadia's Gauss Holdings and 32.5% by the Clay family's Auvergne) paid US$110 million cash for 50% of the project company, GQ California, and Golden Queen keeps 50% through a new subsidiary, GQ Holdco. The July 2014 US$10M bridge note was paid off (about US$6.6M to Leucadia and US$3.6M to Auvergne including interest), the Clay debt restructuring took effect, and Golden Queen paid standby commitment fees of about US$1.5M to Gauss Holdings and US$731,250 to Auvergne; the filing states the rights offering backstop fee but does not say a rights offering has happened. The project board is split equally, and Golden Queen's stake can be diluted if it does not make the top-up contribution (Gauss then puts in up to US$40M).

material agreement

On July 2, 2014 the Soledad subsidiary borrowed US$10,000,000 (US$6.5m from Leucadia, US$3.5m from Auvergne) in a senior secured note at 10%, guaranteed by Golden Queen and secured on the subsidiary's property and shares. It matures at the earlier of the joint venture closing or September 30, 2014, extendable to December 1, 2014 for a US$1,000,000 fee, and is to be repaid from joint venture proceeds. It ranks ahead of the Clay family's existing loans, which they agreed to subordinate. This bridges the June 2014 joint venture deal.

debt financing

On June 8, 2014 the company agreed that Gauss Holdings (Leucadia-controlled) and Auvergne (Clay family) will invest US$110 million for a 50% joint venture interest in Soledad Mountain, which it currently wholly owns. It needs TSX approval and a majority of disinterested shareholders. A US$45 million backstop for a possible rights offering (price up to US$1.10) and a debt restructuring moving guarantees of Clay loans to a new holding company were also agreed. A US$2.5 million termination fee applies in certain circumstances; if the company does not make a top-up contribution, Gauss may put in up to US$40 million and dilute the company's stake.

material agreement

On January 3, 2014 the company agreed a $10,000,000 loan from members of the Clay family, including $7.5 million from a vehicle managed by director Thomas Clay. It carries 5% interest, a twelve-month term, and funds Soledad Mountain development. Because a director's vehicle is lender, this is a related-party loan.

debt financing

On July 26, 2013 the company raised CAD$10,000,000 from two accredited investors through unsecured convertible debentures at 2% interest, convertible at CAD$1.03 per share for two years. Unconverted debentures can be converted at maturity at the lower of CAD$1.03 or the market price, so shareholders could be diluted.

capital raising announcement

On September 6, 2012 the company announced an updated independent reserve estimate and economic analysis for Soledad Mountain, prepared by Norwest. The filing carries no figures; they are in the attached news release.

resource reserve update

The company released an independent Soledad Mountain Feasibility Study dated May 2, 2011, prepared by Norwest Corporation, on its website. The filing gives no figures from the study, and notes it uses Canadian mining definitions not recognised by the SEC.

resource reserve update

The company said its 2009 annual and first two 2010 quarterly financial statements can no longer be relied on and will be restated. Stock options exercisable in a currency other than its functional currency should have been treated as a derivative liability marked to market. The filing says cash flows and project development are unaffected, and amended 10-K and 10-Q filings are planned.

financial restatement

On June 1, 2010 the company completed a private placement of 5,000,000 units at $1.60 for $8,000,000. Each unit has one share plus a quarter each of a Class A warrant ($1.75) and a Class B warrant ($2.00), both exercisable for 18 months. This adds shares and potential further dilution.

capital raising announcement

On January 22, 2008, warrants for 7,200,000 shares were exercised at C$0.60, bringing the company C$4,320,000 to be used for operations and working capital. The number matches the 7,200,000 warrants issued in the January 2006 financing (inference), meaning those warrants were exercised before expiry.

capital raising announcement

The company announced that Norwest Corporation has completed a feasibility study on the Soledad Mountain Project. The filing only references the press release and gives no figures from the study.

resource reserve update

On January 31, 2006 the company sold 7,200,000 units at CAD$0.50 for CAD$3,600,000 gross; each unit is one share plus a two-year warrant at CAD$0.60. It also re-priced and extended 8,000,000 warrants from the January 2004 financing to CAD$0.60 and a June 1, 2006 expiry, and gave Sprott Asset Management a two-year right to join future financings. The re-pricing of the 3,000,000 warrants held by insider Landon Clay needs disinterested shareholder approval at the next annual meeting.

capital raising announcement