Inca One Resources (IO-V) May 20, '14 has arranged a non-brokered private placement of bonds in the amount of $5.5-million.In addition, the subscriber of financings has the first right of refusal to purchase up to $15-million in future debt or equity financings of the company.
Highlights of the financing include the following:
- Funds to increase throughput at Chala by 400 per cent;
- Completion expected by the fourth quarter of 2014;
- Secures first right for additional $15-million in equity or debt financing.
The net proceeds of the financing will be used to expand milling operations and increase throughput at the Chala mill to 100 tonnes per day by the fourth quarter 2014, an increase of 400 per cent. The financing covers inventory ore purchase, plant upgrades, sustaining capital plus general and administrative expenses. Construction and upgrades will continue after the financing closes.
"This financing enables Inca One to make the necessary mill improvements to rapidly increase production and cash flow, with minimal dilution to our shareholders and very manageable repayment," said Edward Kelly, president and chief executive officer of the company. "We are very pleased to have sourced financial partners that share in our vision of growth and opportunity in Peru. We are thankful for the support of the Peruvian government, and will continue to work closely with them and lead by example during this formalization process of small-scale mining and milling operations."
Bond binancing
The company's wholly owned subsidiary will issue a three-year bond in the amount of $5.5-million in connection with the bond financing. The bond will bear interest at a rate of 10 per cent per annum, calculated and payable quarterly in arrears commencing no later than six months from the date of issue. The bond will be issued in two tranches, with $2.7-million issuable at the initial closing and $2.8-million issuable at the subsequent closing, which is expected to close on June 30, 2014.
In connection with the bond financing and as partial consideration for the subscription by the purchaser of the bonds, the company and the purchaser will enter into a financing fee agreement whereby the company and the subsidiary will provide the purchaser a 3.5-per-cent financing fee on the net revenues from the company's Chala mill in Peru. The term of the financing fee agreement expires on Dec. 31, 2024, and may be extended for a maximum of 10 years, subject to certain adjustments and a right of repurchase in favour of the subsidiary. The subsidiary's obligations under the bond financing will also be secured by a general security agreement over the subsidiary's property, which will be guaranteed by the company.
A finder's fee of 8 per cent of the gross proceeds of the bond financing will be payable in cash by the company to SC Strategy Consult AG. The company will also issue to the finder that number of finder's warrants equal to 8 per cent of the bond proceeds, divided by the exercise price of 15 cents.
Closing of the bond financing is subject to the execution of definitive transaction documents and the approval of the TSX Venture Exchange. |
