Oremex Silver Inc. Closes Convertible
Debenture Portion of Private Placement
Oremex Silver Inc. (TSXV: OAG)
(OTCQX: ORAGF) (FRANKFURT: OSI) (the "Company") announced
that on October 9, 2012 it closed the convertible debenture
portion of the non-brokered private placement (the "Debenture Private
Placement") previously disclosed by the Company on September 7,
2012. The Debenture Private Placement raised gross proceeds of $727,500
through the issue of 72.75 units of the Company (the "Debenture Units"),
each Debenture Unit consisting of $10,000 principal
amount of convertible debentures of the Company (the "Debentures")
and 100,000 common share purchase warrants ("Warrants"), at a
purchase price of $10,000 per Debenture Unit. Each Warrant is
exercisable into one common share of the Company (a "Share")
at a price of $0.10 per Share, expiring in five (5) years from
the date of issue.
The Debentures are
convertible into Shares at a price of $0.10 per Share and mature
in five (5) years from the date of issue. The Debentures bear interest at a
rate of 16% per year; 8% is payable in cash and, at the option of the Company,
8% is payable in Shares. On or after 30 months from the date of issue of the
Debentures, or a sale by the Company of all or substantially all of its assets,
or upon a change of control, merger, consolidation or other fundamental
transaction of liquidation of the Company, the holders of Debentures shall have
the right to redeem the Debentures at a redemption price equal to 150% of the
outstanding principal amount of the Debentures, plus any accrued and unpaid
interest; provided that upon such redemption, the holder shall voluntarily
tender to the Company for cancellation 10 Shares for each dollar of Debenture
principal redeemed. The holders of Debentures shall be forced to convert the
Debentures in the event that the closing price of the Shares on the TSX Venture
Exchange exceeds $0.35 for one hundred twenty (120) consecutive
trading days.
The Company has also
granted to the investors an option (the "Option") to invest in
a minimum of $250,000 and up to a maximum of $2,000,000
of additional convertible debentures of the Company ("Additional
Debentures"), having substantially the same terms and conditions as
the Debentures, including the same maturity date and interest rate. The Option
expires on October 9, 2017. Upon the due exercise of the Option
in accordance with its terms, the Company shall grant to investors who exercise
the Option a proportionate interest in a 1.5% net smelter royalty over
production from the Company's Tejamen
and Chalchuites properties, subject to a maximum
royalty payment and indexed to inflation.
The obligations of the
Company under the Debentures and the Option will be guaranteed by the Company's
Mexican subsidiary, Minera Mantos
S. de R.L. de C.V., which guarantee will be secured by a pledge of the
mining concessions, including the� Company's Tejamen
and Chalchuites properties, as well as other personal
property. In the event of enforcement on security, the holders of Debentures
are entitled to retain 280% of the outstanding principal amount of the
Debentures upon disposition of the secured assets.
In connection with the
Debenture Private Placement, the Company will pay a finder's fee
consisting of 250,000 Shares.
All securities issued under
the Debenture Private Placement are subject to a four-month hold period,
in addition to such other restrictions as may apply under applicable securities
laws in jurisdictions outside of Canada.
The closing of the Debenture Private Placement remains subject to the
final approval of the TSX Venture Exchange.
This news release does
not constitute an offer to sell or a solicitation of an offer to buy any of the
company's securities in the
United States. The securities have not been and will not be
registered under the United States Securities Act of 1933, as amended (the 1933
Act), or any state securities laws and may not be offered or sold within the
United States or to U.S. persons unless registered under the 1933
Act and applicable state securities laws, or an exemption from such
registration is available.
About Oremex Silver
Inc.
Oremex Silver Inc. is a Canadian
company focusing on the exploration and development of silver projects along
the highly productive mineralized belt in Mexico.
The Company has a portfolio of silver projects including a mineral resource of
50.8 million ounces of silver at its Tejamen
deposit. The Company's projects are located in mining-friendly jurisdictions
and the Management Team has successful track record of mine building in Mexico.