Contango ORE Announces Agreement to Issue $20,000,000 Unsecured 8% Convertible Debenture
April 09 2022 - 7:00PM
Business Wire
Contango ORE, Inc. (“Contango,” "CORE" or the “Company”) (NYSE
American: CTGO) announced today that it had entered into a binding
agreement to issue a $20,000,000 unsecured convertible debenture to
Queen’s Road Capital Investment, Ltd. ("QRC"). The debenture will
be purchased at par. The closing and issuance of the debenture is
expected to occur on or prior to April 29, 2022, subject to
customary closing conditions. The Company will use the proceeds
from the sale of the debenture to fund commitments to its Peak
Gold, LLC (Manh Choh) joint venture, the exploration and
development at its Lucky Shot properties and for general corporate
purposes.
Rick Van Nieuwenhuyse, the Company’s President and CEO,
stated:
"Management is pleased to finalize this financing with Queen’s
Road Capital. I have known Warren Gilman, the principal of QRC, for
a long time and have been impressed with his grasp of the mining
sector, particularly for recognizing investment opportunities in
quality exploration/development stage companies. We intend to use
the proceeds from this financing to fund our share through
completion of the feasibility study at our 30% owned Manh Choh
project managed by Kinross (70%), as well as our planned
underground exploration program at our 100% owned Lucky Shot
project. Both projects are progressing according to plan with Manh
Choh in the middle of the NEPA permitting process. The feasibility
study is expected to be completed in the second half of 2022.
Underground development mining is underway at Lucky Shot and we
expect to drill a pilot hole next month to determine where to place
the underground drift parallel to and in the footwall of the
historically mined Lucky Shot vein. The exploration drift should be
completed by late summer when exploration drilling will start. With
strong fundamentals in the gold market, Management is excited to
advance our portfolio of high-quality projects in Alaska."
The Debenture
The debenture will bear interest at 8% per annum, payable
quarterly with 6% paid in cash and 2% paid in shares of Contango
common stock issued at the market price at the time of payment
based on a 20-day volumetric weighted average price (VWAP). The
debenture will be unsecured, with a maturity of four years after
issuance. The holder may convert the debenture into Contango common
stock at any time at a conversion price of $30.50 per share,
subject to adjustment. The Company may redeem the debenture after
the third anniversary of issuance at 105% of par, provided that the
market price (based on a 20-day VWAP) of Contango common stock is
at least 130% of the conversion price. The Company may also redeem
the debenture, and the holder will have rights to put the debenture
to the Company, upon a change of control of the Company, with the
redemption or put price being 130% of par for the first three years
following issuance and 115% of par thereafter and accrued interest
at the time of redemption or put being paid in the same form as
other interest payments.
QRC will enter into an investor rights agreement with the
Company in connection with the issuance of the debenture. The
investor rights agreement contains provisions that require QRC and
its affiliates while they own 5% or more of the outstanding
Contango common stock to standstill, not participate in any
unsolicited or hostile takeover of the Company, not tender its
shares of the Company's common stock unless the Company's board
recommends such tender, vote its shares of Contango common stock in
the manner recommended by the Company's board to its stockholders,
and not transfer its shares of Contango common stock representing
more than 0.5% of the outstanding shares without notifying the
Company in advance whereupon the Company will have a right to
purchase those shares.
ABOUT CORE
CORE is a company that engages in the exploration in Alaska for
gold and associated minerals through a 30% interest in Peak Gold,
LLC, which leases approximately 675,000 acres for exploration and
development, and through Contango Minerals Alaska, LLC, its wholly
owned subsidiary, which leases approximately 200,000 acres for
exploration. The Company also owns the rights to the Lucky Shot,
Coleman and War Baby mines, and approximately 16,600 acres of
surrounding mining claims located in Willow Mining District about
75 miles north of Anchorage, Alaska. Additional information can be
found on our web page at www.contangoore.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements regarding
CORE that are intended to be covered by the safe harbor for
“forward-looking statements” provided by the Private Securities
Litigation Reform Act of 1995, based on CORE’s current expectations
and includes statements regarding future results of operations,
quality and nature of the asset base, the assumptions upon which
estimates are based and other expectations, beliefs, plans,
objectives, assumptions, strategies or statements about future
events or performance (often, but not always, using words such as
“expects”, “projects”, “anticipates”, “plans”, “estimates”,
“potential”, “possible”, “probable”, or “intends”, or stating that
certain actions, events or results “may”, “will”, “should”, or
“could” be taken, occur or be achieved). Forward-looking statements
are based on current expectations, estimates and projections that
involve a number of risks and uncertainties, which could cause
actual results to differ materially from those, reflected in the
statements. These risks include, but are not limited to: the risks
of the exploration and the mining industry (for example,
operational risks in exploring for, developing mineral reserves;
risks and uncertainties involving geology; the speculative nature
of the mining industry; the uncertainty of estimates and
projections relating to future production, costs and expenses; the
volatility of natural resources prices, including prices of gold
and associated minerals; the existence and extent of commercially
exploitable minerals in properties acquired by CORE or Peak Gold
LLC; ability to realize the anticipated benefits of the recent
transactions with an affiliate of Kinross; disruption from the
transactions and transition of the Peak Gold, LLC’s management to
an affiliate of Kinross, including as it relates to maintenance of
business and operational relationships; potential delays or changes
in plans with respect to exploration or development projects or
capital expenditures; the interpretation of exploration results and
the estimation of mineral resources; the loss of key employees or
consultants; health, safety and environmental risks and risks
related to weather and other natural disasters); uncertainties as
to the availability and cost of financing; CORE’s inability to
retain or maintain its relative ownership interest in Peak Gold,
LLC; inability to realize expected value from acquisitions;
inability of our management team to execute its plans to meet its
goals; the extent of disruptions caused by the COVID-19 outbreak;
and the possibility that government policies may change, political
developments may occur or governmental approvals may be delayed or
withheld, including as a result of the recent presidential and
congressional elections in the U.S. or the inability to obtain
mining permits. Additional information on these and other factors
which could affect CORE’s exploration program or financial results
are included in CORE’s other reports on file with the U.S.
Securities and Exchange Commission. Investors are cautioned that
any forward-looking statements are not guarantees of future
performance and actual results or developments may differ
materially from the projections in the forward-looking statements.
Forward-looking statements are based on the estimates and opinions
of management at the time the statements are made. CORE does not
assume any obligation to update forward-looking statements should
circumstances or management’s estimates or opinions change.
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version on businesswire.com: https://www.businesswire.com/news/home/20220409005031/en/
Contango ORE, Inc. Rick Van Nieuwenhuyse (713) 877-1311
www.contangoore.com
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