Golden Phoenix Minerals Enters Into Common Stock Purchase Agreement for up to $6.2 Million Standby Equity Funding
Friday July 15, 5:00 am ET
SPARKS, Nev., July 15 /PRNewswire-FirstCall/ -- Golden Phoenix Minerals, Inc. (OTC Bulletin Board: GPXM - News) is pleased to announce it has secured $6.2 million of standby equity capital with which to underpin company-wide operations including the start-up of its Ashdown molybdenum mine located in northwest Nevada. The funds are available on an as-needed basis through a common stock purchase agreement with Fusion Capital Fund II, LLC, a Chicago-based institutional investor.
The agreement is the second phase of a two-part funding program initiated in 2002. Under the terms of the new 24-month agreement Golden Phoenix may elect, at its sole discretion, to sell up to $12,500 of common stock to Fusion Capital each trading day. In turn, Fusion Capital has committed to buy the stock at a cost that is based on the market price as of the date of each purchase, without any fixed discount to market. The agreement provides the Company a backup to the financing already in place and will be held in reserve as a secondary source of future funding, if needed.
Kenneth S. Ripley, CEO of Golden Phoenix, said, "Our management team carefully reviewed more than a dozen funding proposals over the past four months and came to realize that our existing relationship with Fusion Capital offers the most cost-effective source of standby capital to date. We believe Fusion Capital's willingness to renew their support demonstrates continued confidence in Golden Phoenix."
Mr. Ripley stressed that "we are particularly pleased with the flexibility and control this arrangement provides. The agreement does not limit our right to seek alternative debt or asset-based financing, which we continue to do. On the contrary, we regard our ability to attract other forms of funding and fulfill current loan obligations as clearly strengthened by the presence of this safety-net."
Under the terms of the agreement Golden Phoenix controls both the timing and amount of stock sold to Fusion Capital. The Company may also refrain from utilizing further funding and terminate the agreement at any time, without penalty. As a condition of financing, the Company has consented to sell $200,000 of common stock to Fusion Capital at $0.15 per share. The agreement stipulates that Fusion Capital will not engage in any direct or indirect short selling or hedging of the Company's common stock in any manner whatsoever.
Fusion Capital will receive a commitment fee of 2.19 million shares of restricted common stock, which are not to be sold or transferred for the duration of the agreement. The initial sale of stock and issuance of commitment shares to Fusion Capital is offset in part by the retirement of 2.65 million GPXM options, which expired during the first two quarters of 2005. A registration statement will be submitted to the Securities & Exchange Commission and must be declared effective before Golden Phoenix can access the funds. A detailed description of the transaction is set forth in a Form 8-K filed with the SEC.
About Fusion Capital
Fusion Capital Fund II, LLC is a broad-based investment fund, based in Chicago, Illinois. Fusion Capital makes a wide range of investments ranging from special situation financing to long-term strategic capital.
About Golden Phoenix
Golden Phoenix Minerals, Inc. is a Nevada-based mining company committed to deliver value to its shareholders by acquiring, developing and mining superior precious and strategic metal deposits in the western United States using competitive business practices balanced by principles of ethical stewardship.
Visit the Golden Phoenix Web site at golden-phoenix.com
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