Kerr Mines Closes Oversubscribed Private Placement and Convertible Note Financing From Sprott Lending
November 28 2018 - 6:30AM
Kerr Mines Inc. (TSX:
KER, OTC: KERMF, FRA: 7AZ1) (“Kerr” or the
“Company”) announces that it has closed a non-brokered
private placement raising gross proceeds of $2,973,517 (the
“Offering”). The Offering, previously announced on November 9,
2018, targeted proceeds of $2.5 million, which was oversubscribed.
Furthermore, the Company has closed the US$2 million (CDN $2.7
million) senior secured convertible note financing with Sprott
Private Resource Lending (Collector) LP previously announced on
November 6, 2018 (the “Note”). The proceeds of the financing shall
be utilized to commence a resource expansion program, complete
permit modifications and conclude metallurgical test-work along
with general and corporate working capital.
“We have taken another very important step
forward in the execution of our strategy and development plans for
the Copperstone Mine. This financing will allow the Company
to commence a resource expansion program and complete key elements
of progressing the Copperstone Mine back into production,” stated
Claudio Ciavarella, Kerr’s Chief Executive Officer. “As a show of
confidence in the extensive work that our team has achieved to date
and the belief in our project, the entire Board and our VP Projects
have participated in this financing,” concluded Ciavarella.
Private Placement
The Company completed the Offering consisting of
21,239,409 units of the Company (the “Units”) at a price of
CDN$0.14 per Unit for total gross proceeds of CDN$2,973,517.
Each Unit consists of one common share of the Company (a
“Common Share”) and one Common Share purchase warrant (a
“Warrant”). Each Warrant entitles the holder to purchase one Common
Share at a price of CDN$0.21 per Common Share until November 27,
2020 provided that if, at any time the Common Shares trade on a
stock exchange at a volume weighted average trading price of
CDN$0.30, or greater, per Common Share for a period of 20
consecutive trading days, the Company may accelerate the expiry
date of the Warrants by giving notice to the holders thereof and in
such case the Warrants will expire on the 30th day after the date
on which such notice is given by the Company. In connection with
the Offering the Company did not incur any finders fees. All
securities issued pursuant to the Offering shall be subject to a
hold period of four months from the date of closing.
Insiders of the Company subscribed for the
following Units under the Offering,
Insider |
Number of Units |
Fahad Al Tamimi, Chairman of the Board |
3,571,429 |
Claudio Ciavarella, CEO |
2,142,860 |
Martin Kostuik, President |
376,728 |
Peter Damouni, Director |
428,571 |
James McVicar, Director |
178,571 |
Ayman Arekat, Director |
100,000 |
Dave Thomas, VP Projects |
48,285 |
Total |
6,846,444 |
|
|
The issuance and sale of Units under the
Offering to insiders of the Company constituted related party
transactions within the meaning of Multilateral Instrument 61-101
(“MI 61-101“). The Company is relying on the
exemptions from the valuation and minority shareholder approval
requirements of MI 61-101 contained in sections 5.5(a) and
5.7(1)(a) of MI 61-101, as the fair market value of the
participation in the Offering by each insider does not exceed 25%
of the market capitalization of the Company, as determined in
accordance with MI 61-101. The Company did not file a
material change report in respect of the related party transaction
at least 21 days before the closing of the Offering, which the
Company deems reasonable in the circumstances so as to be able to
avail itself of the proceeds of the Offering in an expeditious
manner.
The Note
The US$2 million (CDN$2.7 million) Note,
Phase 1 of the Sprott project financing facility, will bear
interest at a rate of 9% per annum payable semi-annually and
matures on May 31, 2020. The Note is convertible into Common Shares
at any time prior to maturity at a conversion price of CDN$0.16 per
share. The Company can redeem the Note at any time by paying the
outstanding principal amount in cash, or with the agreement of the
holder, in Common Shares of the Company, together with interest
payable to maturity.
In connection with the Note, the Company issued
to Sprott one million common share purchase warrants (the “Sprott
Warrants’). Each Sprott Warrant entitles the holder to
purchase one Common Share at a price of CDN$0.15 until November 27,
2021. The expiry of the Sprott Warrants can be accelerated at the
Company’s election if the trading price of the common shares is
higher than 2.5 times the exercise price for 30 consecutive trading
days.
About Kerr Mines Inc. Kerr
Mines is an Emerging American Gold Producer currently advancing the
100% owned, fully permitted past-producing Copperstone Mine project
to production. Copperstone is a high-grade gold project located
along a detachment fault mineral belt in mining-friendly Arizona.
This gold project in Arizona demonstrates tremendous exploration
potential targeting multi-million ounce prospects within a 4,775
hectare (11,800 acres) land package.
About Sprott Inc. Sprott is an
alternative asset manager and a global leader in precious metal and
real asset investments. Through its subsidiaries in Canada, the US
and Asia, the company is dedicated to providing investors with
best-in-class investment strategies that include Exchange Listed
Products, Alternative Asset Management and Private Resource
Investments. The company also operates Merchant Banking and
Brokerage businesses in both Canada and the US. Sprott is based in
Toronto with offices in New York, Carlsbad and Vancouver and its
common shares are listed on the Toronto Stock Exchange under the
symbol (TSX:SII). For more information, please visit
www.sprottinc.com.
PDF Version of 43-101 technical report available:
http://kerrmines.com/wp-content/uploads/KerrCopperstone_PFS_43-101.pdf
YouTube: Copperstone Gold Mine KER:TSX 3 min.
Investor Tour Video
For further information
contact:Claudio Ciavarella Chief Executive
Officercciavarella@kerrmines.com 416-855-9305
Cautionary Note Regarding Forward
Looking Statements This news release contains
forward-looking statements, including current expectations on the
timing of the commencement of production and the rate of
production, if commenced. These forward-looking statements entail
various risks and uncertainties that could cause actual results to
differ materially from those reflected in these forward-looking
statements. Such statements are based on current expectations, are
subject to a number of uncertainties and risks, and actual results
may differ materially from those contained in such statements.
These uncertainties and risks include, but are not limited to, the
strength of the Canadian economy; the price of gold; operational,
funding, and liquidity risks; the degree to which mineral
resource estimates are reflective of actual mineral resources; and
the degree to which factors which would make a mineral deposit
commercially viable are present; the risks and hazards associated
with underground operations. Risks and uncertainties about Kerr
Mines’ business are more fully discussed in the Company's
disclosure materials, including its annual information form and
MD&A, filed with the securities regulatory authorities in
Canada and available at www.sedar.com and readers are urged to read
these materials. Kerr Mines assumes no obligation to update any
forward-looking statement or to update the reasons why actual
results could differ from such statements unless required by
law. Neither TSX nor its Regulation Services Provider (as
that term is defined in the policies of the TSX) accepts
responsibility for the adequacy or accuracy of this release and no
stock exchange, securities commission or other regulatory authority
has approved or disapproved the information contained herein.