Loan to be issued in two tranches, with C$5 million due at signing
By Susanna Moon
Chicago, Feb. 24 - Discovery Ventures Inc. said it entered into a non-binding term sheet for a C$12 million senior secured term debt facility in two tranches, with C$5 million available initially.
In the second tranche, C$7 million will be available upon the achievement of certain milestones, including Discovery completing one or more transactions or arrangements to generate proceeds of at least C$5 million, according to a company press release.
Discovery said it also must obtain government permits and authorization to begin production at its Willa Deposit and the Max Mill facility and complete refurbishment of the Max Mill so that processing of material from its Willa Deposit may begin.
The facility matures in 24 months and accrues interest at 12.5% per year. A 5% annual rollover fee on the principal amount is payable on maturity for each 12-month period that the facility is outstanding and a 2% structuring fee on the principal amount is payable on the effective date.
Discovery has agreed to grant the lender a right of first refusal for any subsequent non-equity financing transactions that may occur before maturity.
The company must complete an equity financing for proceeds of at least C$2.5 million on or before the effective date. On the effective date, Discovery must issue to the lender 5 million common shares and 5 million warrants, with each warrant for an additional 5 million shares for a period of three years.
BayFront Capital Partners Ltd. is the financial advisor for the facility and the agent for the proposed equity financing.
Proceeds of the first tranche will be used to complete the acquisition of FortyTwo Metals Inc., a wholly owned subsidiary of Roca Mines Inc., and for permitting and the refurbishment of the Max Mill. Proceeds of the second tranche will be used toward the development of the company's Willa Deposit.
The gold, silver and copper mining company is based in Vancouver, B.C.
| Issuer: | Discovery Ventures Inc.
|
| Issue: | Senior secured term debt facility
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| Amount: | C$12 million
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| Maturity: | 24 months
|
| Coupon: | 12.5%
|
| Warrants: | 5 million warrants for 5 million shares each
|
| Warrant expiration: | Three years
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| Agent: | BayFront Capital Partners Ltd.
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| Pricing date: | Feb. 24
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| Stock symbol: | Canada: DVN
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| Stock price: | C$0.22 at close Feb. 21
|
| Market capitalization: | C$9.16 million
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