�1.3 Million Financing Package
ECR Minerals plc
is pleased to announce that it has executed a financing package with YA Global
Master SPV Ltd (�YA�) to raise approximately GBP 1.3 million before costs.
The
four elements of the financing package are:
- a USD 1
million loan from YA (the �Loan�);
- the
subscription by YA for 75,757,575 ordinary shares in the Company of 0.1p
(�Ordinary Shares�) at a price of 0.66p per share raising �500,000 before
costs (the �Subscription�);
- an
equity swap in respect of 75,757,575 Ordinary Shares (the �Equity Swap�) with
a benchmark price of 0.66p (the �Benchmark Price�); and
- an
advance under ECR�s Standby Equity Distribution Agreement (�SEDA�) with YA
raising GBP 150,000 before costs by the issue of 25,070,902 Ordinary
Shares at a price of 0.5983p per share.
ECR�s
rationale for entering into the Equity Swap is to allow the Company the
opportunity to benefit from increases in its share price above the level of the
Benchmark Price during the period of the Equity Swap, subject to the parameters
described below.
The
net proceeds of the financing package will be used to support activities at
ECR�s 100% owned Sierra de las Minas gold project in
Argentina, including the planned underground sampling programme
at the El Abra prospect described in the Company�s
announcement of 7 August 2012; to repay an amount of USD 409,610 that remains
outstanding pursuant to the USD 1.5 million loan obtained from YA in August
2011; and for general corporate purposes.
Patrick
Harford, Managing Director of ECR Minerals plc,
comments:
�This
substantial financing package will fund ECR for the planned underground
sampling programme at the El Abra
gold prospect in Argentina and sustain the Company while work continues towards
the monetisation of some of its other assets,
including its interest in the ACS Asia manufacturing business.
It
is also ECR�s intention to dispose of a significant part of its interest in
THEMAC Resources Group, but if this is to occur on advantageous terms it is
essential to be working from a position of some financial strength, which the
arrangements announced today allow us to do.
The
implication of the Equity Swap is that if the ECR share price exceeds the 0.66p
Benchmark Price by a sufficient margin, the Company will receive extra funds,
which would clearly be to the benefit of shareholders. The chosen Benchmark
Price was approximately the prevailing price of the Company�s shares on AIM at
the time the terms of the Equity Swap were agreed.
We
are also pleased that once again the SEDA has enabled ECR to secure equity
funds at a comparatively modest discount to market.�
Loan
The
principal amount of the Loan is USD 1 million. This amount is due to be repaid
in twelve tranches, with the final repayment due in July 2013, however the
Company has the right to repay the Loan early if desired.
Interest
at a rate of 10% per annum on the outstanding principal amount is payable with
each repayment tranche and an implementation fee of 10% of the principal amount
has been paid to YA out of the Loan proceeds.
The
Loan is secured over listed securities held by the Company and under the SEDA,
the validity of which has been extended until April 2014. YA has the right to
convert the outstanding amount of the Loan into Ordinary Shares at any time
based on a price of 0.729p, being 150% of the volume weighted average price of
ECR shares on AIM for the five trading days prior to the date the Loan was
agreed.
Equity
Elements
YA
has subscribed for 75,757,575 Ordinary Shares at a price of 0.66p per share,
raising GBP 500,000 before costs. In addition, ECR has entered into the Equity
Swap with YA in respect of the same number of Ordinary Shares. The period of
the Equity Swap is approximately 12 months.
The
Equity Swap provides for monthly payments to either the Company or YA depending
on the performance of the ECR share price in relation to the Benchmark Price of
0.66p. It also entails GBP 250,000 of the Subscription proceeds being placed
into escrow and envisages this amount being released back to ECR in 12 equal
monthly instalments (each a �Monthly Instalment�).
In
a given month, the figure that is 90% of the average of the lowest ten daily
volume weighted average prices for ECR shares on AIM shall be deemed to be the
market price of the shares (the �Market Price�) for the purposes of the Equity
Swap.
If
the Market Price for a given month is greater than the Benchmark Price, then in
respect of a certain number of shares (the �Applicable Share Amount�), YA will
pay to the Company a proportion of the difference between the Market Price and
the Benchmark Price. If the Market Price exceeds 2p, this proportion will be
increased.
Any
such amount would be received by ECR in addition to the relevant Monthly
Instalment, and there is no upper limit on the additional amount that may be
received by the Company pursuant to the Equity Swap.
If
the Market Price for a given month is less than the Benchmark Price, then in
respect of the Applicable Share Amount, ECR will pay to YA the difference
between the Market Price and the Benchmark Price. In practice any such payment
would be satisfied first by deduction from the relevant Monthly Instalment,
however if the Market Price were less than half the Benchmark Price, the amount
due to YA would exceed the relevant Monthly Instalment. ECR would therefore not
receive the Monthly Instalment and would be required to make a payment to YA.
The
Applicable Share Amount will be 6,313,131 Ordinary Shares, being one twelfth of
the total number of Ordinary Shares subject to the Equity Swap, unless YA elects to shorten the duration of the Equity Swap and
proportionally increase the Applicable Share Amount and the amount of the
Monthly Instalment.
YA
has the right to terminate the Equity Swap early and accelerate all the payment
obligations, and under certain circumstances, for example if the Company is in
material breach of any its obligations to YA, other methods of determining a
Market Price for the purposes of terminating the Equity Swap may be applied.
Under
no circumstances can YA require ECR to issue any additional shares pursuant to
the Equity Swap, and YA and its affiliates are prohibited from holding any net
short position in ECR shares.
A
commitment fee of GBP 50,000 is payable by the Company in connection with the
Equity Swap, and of this amount, GBP 25,000 is payable immediately and has been
settled by the issuance of 3,787,878 Ordinary Shares at the Benchmark Price.
The remainder of the commitment fee is payable six months from the date the Equity
Swap was agreed or on termination, whichever is the earlier.
Pursuant
to this announcement application has been made for a total of 104,616,355 new
Ordinary Shares to be admitted to trading on AIM. Dealings are expected to
commence on 20 August 2012. The new Ordinary Shares will rank pari passu in all
respects with the Ordinary Shares of the Company currently traded on AIM.
Following
admission, the Company�s issued share capital will consist of 910,092,928
Ordinary Shares. The Company does not hold any Ordinary Shares in treasury.
Therefore the total number of Ordinary Shares with voting rights is
910,092,928.
The
above figure of 910,092,928 Ordinary Shares may be used by shareholders in the
Company as the denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change to their interest
in, the share capital of the Company under the Financial Services Authority�s
Disclosure and Transparency Rules.
About
YA
YA
is advised by Yorkville Advisors, which is an investment manager headquartered
in Jersey City, New Jersey, USA. Yorkville is active across North America,
Europe and the Asia-Pacific region, and operates in the UK through its
affiliated entity Yorkville Advisors UK LLP.
About
ECR Minerals plc
ECR
is a mineral development company with the following main projects and
interests.
- 100%
ownership of the Sierra de las Minas gold project in La Rioja Province,
Argentina, where the Company�s strategy is to work up small, high grade
gold targets that may be suitable for early advancement to production. ECR
has completed an initial drill programme at the El Abra gold prospect with
promising results (best intersection 3.9m downhole at 11.6 g/t gold
including 0.2m at 109.1 g/t gold) and is moving to follow up these results
with a programme of underground sampling within historical workings.
- A 21%
fully diluted stake in THEMAC Resources Group Ltd (TSX-V: MAC), which is
focused on the development of the Copper Flat
copper-molybdenum-gold-silver porphyry deposit in New Mexico, USA to
production. THEMAC has completed a prefeasibility study (PFS) for Copper
Flat that indicates a pre-tax IRR for the project of 36.2% and a pre-tax
NPV of USD 388.5 million at an 8% discount rate, based on July 10 2012
metal prices and initial capital costs of USD 297.7 million.
- Shareholdings
in West Wits Mining Ltd (ASX: WWI) and Paniai Gold Ltd (unquoted), both of
which have interests in the Derewo River gold project in Papua, Indonesia,
the objective of which is to establish a modern alluvial gold mining
operation on a 40 hectare mining licence and to explore a number of
exploration licences for new deposits.