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ST. PETER PORT , Guernsey, July 17, 2014 /CNW/ - Avnel Gold Mining Limited (" Avnel Gold " or the "Company") (AVK.TO) is pleased to announce today the closing of its previously announced private placement (the "Offering") led by Haywood Securities Inc. ("Haywood"). Pursuant to the Offering, Avnel Gold issued 65,786,400 units of the Company (the "Units") at a price of C$0.15 per Unit (the "Issue Price") for gross proceeds of approximately C$9.9 million .
Each Unit consists of one Ordinary Share (as defined below) (a "Unit Share") and one transferable ordinary share purchase warrant (a "Warrant"). Each Warrant entitles the holder to purchase one ordinary share in the capital of Avnel Gold (a "Ordinary Share") at a price of C$0.20 , at any time for a period of 30 months from the date hereof, provided that in the event that the Ordinary Shares trade on the Toronto Stock Exchange (the "TSX"), or other recognized stock exchange or market, as applicable, at a volume weighted average price of C$0.30 or more for a period of at least 20 consecutive trading days, the Company shall be entitled to accelerate the exercise period to a period ending at least thirty days from the date that notice of such acceleration is provided to the holders of Warrants.
Prior to the closing of the Offering, Elliott International, L.P. and The Liverpool Limited Partnership (collectively, the "Elliott Group"), existing shareholders of the Company, held, in the aggregate, 112,981,945 Ordinary Shares (representing approximately 58.9% of the pre-closing issued and outstanding Ordinary Shares). Pursuant to the Offering, the Elliott Group purchased, in the aggregate, 54,000,000 Units (equal to approximately 82% of the Units sold pursuant to the Offering), in order to at least maintain its pro rata ownership interest in the Company. The Elliott Group now holds 166,981,945 Ordinary Shares (representing approximately 64.8% of the issued and outstanding Ordinary Shares) and, assuming the exercise of all 54,000,000 Warrants issued to the Elliott Group pursuant to the Offering, the Elliott Group will hold an aggregate of 220,981,945 Ordinary Shares (representing approximately 68.3% of the issued and outstanding Ordinary Shares assuming the exercise by all other purchasers under the Offering of all of their respective Warrants, or approximately 70.9% of the issued and outstanding Ordinary Shares, assuming only the Elliott Group exercises its Warrants). The Elliott Group is an insider of the Company by virtue of holding greater than 10% of the Company's currently issued and outstanding Ordinary Shares.
One of the subscribers to the Offering, MILFAM II L.P. ("M2"), is an existing shareholder of the Company, and is managed by Lloyd I. Miller, III. Prior to the closing of the Offering, Mr. Miller owned or had control or direction, through M2, a trust and a limited liability company, over an aggregate of 13,492,641 Ordinary Shares (representing approximately 7.0% of the pre-closing issued and outstanding Ordinary Shares). M2 subscribed for an aggregate of 7,800,000 Units which, if issued, would have made Mr. Miller an insider of the Company (assuming the full exercise of Warrants that would have been issued to M2 pursuant to such subscription). Accordingly, Mr. Miller, through M2, purchased 6,000,000 Units in the Offering and now holds an aggregate of 19,492,641 Ordinary Shares (representing approximately 7.6% of the issued and outstanding Ordinary Shares). The additional 1,800,000 Units, subject to M2's original subscription, will be issued to M2 following receipt of TSX approval of Mr. Miller becoming an insider of the Company. At the time that such approval is granted, and the issuance of the additional 1,800,000 Units is completed, Mr. Miller will hold in the aggregate of 21,292,641 Ordinary Shares (representing approximately 8.2% of the issued and outstanding Ordinary Shares) and, assuming the exercise of all 7,800,000 Warrants issued to M2 pursuant to the Offering, Mr. Miller will hold an aggregate of 29,092,641 Ordinary Shares (representing approximately 8.9% of the issued and outstanding Ordinary Shares assuming the exercise by all other purchasers under the Offering of all of their respective Warrants, or approximately 10.9% of the issued and outstanding Ordinary Shares, assuming only M2 exercises its Warrants).
In connection with the Offering, the Company has received the TSX's conditional listing approval to list and post for trading the Unit Shares and the ordinary shares of the Company underlying the Warrants. The Company also applied to the TSX for, and received, an exemption from the requirement to seek shareholder approval in accordance with Section 604(e) of the TSX Company Manual on the basis the Company found itself in a state of financial hardship. Avnel Gold believes that, with the completion of the Offering, it will be in compliance with all of the continued listing requirements of the TSX. In addition, due to the participation of an insider of the Company in the Offering, the Offering was a "related party transaction" for the purposes of Multilateral Instrument 61-101– Protection of Minority Security Holders in Special Transactions ("MI 61-101") and the Company has relied on exemptions from the formal valuation and minority approval requirements of such instrument on a determination of financial hardship available to it pursuant to Section 5.5(g) and Section 5.7(l)(e) of MI 61-101, respectively.
In connection with the closing of the Offering, in addition to certain cash compensation described in the Company's June 26, 2014 press release, Haywood was granted compensation warrants (i) entitling Haywood to purchase 1,060,776 Ordinary Shares (the "Share Compensation Warrants"), with an exercise price per Share Compensation Warrant that is equal to the Issue Price and (ii) entitling Haywood to purchase 810,000 Units (the "Unit Compensation Warrants"), with an exercise price per Unit Compensation Warrant that is equal to the Issue Price.
For more information regarding the terms of the Offering, please see the Company's press release dated June 26, 2014 filed on www.sedar.com.
About Avnel Gold
Avnel Gold is a TSX-listed gold mining, exploration and development company with operations in southwestern Mali , near the border with Guinea , in West Africa . The Company is focused on developing the Kalana Gold Project into a low cost, open-pit mining operation. The Company is also advancing several satellite deposits that have the potential to become part of a larger mining operation on the 387 km2 30-year Kalana Exploitation Permit.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained in this news release.
The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended ("U.S. Securities Act") or applicable state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, "U.S. persons" as such term is defined in Regulation S under the U.S. Securities Act, absent registration or an applicable exemption from registration requirements. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities to, or for the account or benefit of, persons in the United States or U.S. persons.
CAUTIONARY STATEMENTS
Forward-Looking Statements
This news release includes certain "forward-looking statements" under applicable securities laws. All statements, other than statements of historical fact, included in this release, including the future plans and objectives of Avnel Gold , are forward-looking statements that involve various risks and uncertainties. There can be no assurance that forward-looking statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Avnel Gold's expectations include, among others, risks related to international operations, the actual results of current exploration activities, conclusions of economic evaluations and changes in project parameters as plans continue to be refined as well as future prices of gold and silver, as well as those factors discussed in the section entitled "Risk Factors" in Avnel Gold's Annual Information Form, which is available on SEDAR (www.sedar.com). Although Avnel Gold has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Preliminary Economic Assessment
The Kalana Preliminary Economic Assessment ("PEA") is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves; thus, there is no certainty that the economic benefits indicated in the PEA will be realized. The PEA is subject to a number of assumptions, including, among others that an Environmental Impact Assessment will be completed within the required timeline, all required permits will be obtained in a timely manner, the company will continue to have the support of local community, a constant regulatory environment and no material increase occurs to the estimated costs. Investors are cautioned not to assume that all or any portion of these mineral resources will ever be converted into proven and probable reserves. The Kalana PEA is based upon an 8.54 million tonne Indicated Mineral Resource grading 4.53 grams of gold per tonne ("g/t Au") containing 1.25 million ounces and a 2.09 million tonne Inferred Mineral Resource grading 3.76 g/t Au containing 0.25 million ounces utilizing a cut-off grade of 0.9 g/t Au. The PEA also includes 0.66 million tonnes of tailings grading 1.80 g/t Au that are classified as an Indicated Mineral Resource. Investors are cautioned not to assume that all or any portion of these mineral resources will ever be converted into proven and probable reserves. The NI 43-101 technical report for the PEA and the Mineral Resource Estimate was prepared by Snowden Mining Industry Consultants and was filed on SEDAR (www.sedar.com) on 31 March 2014 . The summary of the PEA above has been prepared under the supervision of Roy Meade , Director and Executive Director, Operations of Avnel Gold and a "Qualified Person" for the purposes of NI 43-101.A copy of the PEA was filed on SEDAR (www.sedar.com) on 31 March 2014 .
SOURCE Avnel Gold Mining Ltd.