Canadian exploration company Algold Resources Ltd (Algold) has entered into low-dilution funding agreements totalling US$9.2 million (CAN$12 million). Algold and one of its major shareholders, Wafa Mining & Petroleum SA (Wafa), a subsidiary of Wafa Holding, have signed a non-binding term sheet for an investment by Wafa, under which Wafa will acquire a 10% interest in the company’s Tirex subsidiary, owner of the Tijirit mining permit and gold development project (the Investment), as well as a subscription by Wafa for 8 837 472 common shares of Algold at a price of CAN$0.10 per share, for a total amount of US$4.2 million in cash.
Concurrently, Algold has also entered into a secured credit agreement with a consortium of lenders to establish a short-term loan facility in the aggregate amount of US$5 million.
Algold’s CEO, Benoit La Salle, commented:"We thank Wafa, a long-standing strategic investor who shares Algold's long-term vision, which is of particular significance given the current headwinds faced by gold development companies. Wafa invested in Algold in two previous rounds of financing and this strategic funding confirms their commitment to help Algold reach the next stage of development."
"We are delighted to have received such a substantial commitment from our lenders as well as from one of our largest shareholders, who understand the full potential of the Tijirit Project."
Wafa CEO, Brahim Ghadda, added: "Wafa envisions tremendous potential in the development of the Tijirit Project. This investment demonstrates our continued commitment to advance Tijirit Project to the next stage of development."
The net proceeds of the Loan, the Investment and the Subscription will be used to fund completion of technical studies, for working capital and for general corporate purposes.
As security for the loan, Algold has granted the arm's length lenders, including Downtown Special Situations Holdings, LLC, Delaware Street Capital Master Fund, L.P., Saiso Partners LLC, Capital Drilling Ltd. and BPM Capital Ltd (the Lenders) a hypothec on all of its assets, including the equity interests that it holds in its each of its direct subsidiaries. The Loan has a term of one year and bears interest at an annual rate of 15%. In connection with the Loan, Algold has issued to the Lenders a total of 12 756 470 common shares of Algold (the Bonus Shares), which are subject to a four-month hold period. The loan remains subject to the approval of the TSX Venture Exchange (the TSXV).
In connection with the Investment and the Subscription, Algold is to grant Wafa the right to name an additional director to Algold's board, giving it the right to name two directors in total (see Algold's press release of 6 February 2018).
The Investment and the Subscription remain subject to customary conditions, including the negotiation of definitive transaction documents and the approval of both the Government of Mauritania and the TSXV.
The company also announced that its shareholders approved, at the Algold’s Annual General and Special Meeting of Shareholders held on 28 June 2018, a consolidation of Algold's common shares on the basis of one new common share for each ten existing common shares (the Consolidation). Following the Consolidation, it is expected that the total number of outstanding shares will be reduced from 236 745 886 to 23 674 588.
The Consolidation is expected to become effective on approximately 20 July 2018. The Consolidation is subject to TSXV approval.
Read the article online at: https://www.globalminingreview.com/finance-business/17072018/algold-secures-us92-million-funding-for-advancement-of-tijirit-project/