Mr. Mike Mutchler reports
AMARILLO ANNOUNCES PROPOSED FULL REPAYMENT OF THE GOLD-LINKED LOAN AND OTHER CONCURRENT SHARES FOR DEBT TRANSACTIONS
Amarillo Gold Corp. intends to: (I) fully repay the gold-linked credit facility for $8.5-million (U.S.) through a combination of $7.4-million (U.S.) in cash and $1.1-million (U.S.) in new equity; and (ii) settle an aggregate amount of $1.2-million (Canadian) in payables owing to certain arm's-length and non-arm's-length parties.
Pursuant to the full repayment of the gold loan and the completion of the concurrent shares for debt transactions, the company is expected to issue 5,377,819 and 4,177,888 common shares in its capital, respectively, at a deemed price of 28 Canadian cents per share (and where applicable, at a Canadian/U.S.-dollar exchange rate of 1.3168). An aggregate of 2,892,952 common shares is expected to be issued to non-arm's-length parties pursuant to the concurrent shares for debt transactions.
Mike Mutchler, president and chief executive officer of Amarillo, commented: "We are using some of the proceeds from the previously announced net smelter royalty sale to Royal Gold Inc. to repay the outstanding gold loan. The loan, which was from a consortium of lenders who also comprised some of our largest shareholders, was taken out in instalments between 2014 and 2016, and was used to cover exploration and operating costs on the company's gold projects in Brazil. This loan, which was obtained by the company's previous management team during difficult market conditions to minimize shareholder dilution, was indexed to the price of gold and accrued interest at a rate of 12 per cent per annum. We are quite pleased to be able repay the loan now with the company on a significantly improved financial standing. I would like to thank the original lenders for their past and ongoing support of the company. In addition, we will be satisfying a significant amount of the company's outstanding payables pursuant to the concurrent shares for debt transactions, as well as a portion of the indebtedness represented by the gold loan, with shares to improve the company's balance sheet while conserving the company's cash for operational and mine development purposes."
Hemdat Sawh, chief executive officer of Amarillo, commented: "Following the successful conclusion of the net smelter royalty agreement with Royal Gold Inc. which resulted in gross proceeds of $10.8-million (U.S.), we are now able to extinguish the relatively high interest rate gold loan by paying cash of $7.4-million (U.S.) and the remaining balance of $1.1-million in shares of the company. Our net cash position has increased by $3.4-million (U.S.) after these two transactions. We have also repaid an additional $1.2-million (Canadian) in payables by issuing shares of the company. Accordingly, our balance sheet including cash position has improved significantly and we can now focus exclusively on advancing our projects in Brazil."
The issuance of common shares to certain non-arm's-length parties pursuant to the concurrent shares for debt transactions will constitute a related party transaction as this term is defined in Multilateral Instrument 61-101 -- Protection of Minority Securityholders in Special Transactions. The company will rely on the exemption from the valuation requirement and the minority approval requirement pursuant to Subsections 5.5(a) and 5.7(a) of MI 61-101, respectively, as the securities will not represent more than 25 per cent of the company's market capitalization, as determined in accordance with MI 61-101. The participation by the non-arm's-length parties in the concurrent shares for debt transactions has been approved by directors of the company who are independent in connection with such transactions.
All securities issued pursuant to the repayment of the gold loan and the concurrent shares for debt transactions will be subject to a hold period of four months and one day from the date of issuance, in accordance with applicable securities legislation.
The repayment of the gold loan and the completion of the concurrent shares for debt transactions are subject to a number of conditions, including the approval of the TSX Venture Exchange.
A material change report will be filed less than 21 days before the closing date of the transactions contemplated by this news release. The report will be filed once the TSX-V reviews the proposed transactions, provides any comments it may have and provides its conditional approval for such transactions.
AboutAmarillo Gold Corp.
Amarillo is developing an economic, open-pit gold resource at its Mara Rosa project in the mining-friendly jurisdiction of Goias state in Brazil. An updated prefeasibility study (NI 43-101 technical report) for the Mara Rosa project was filed on SEDAR on May 4, 2017. The Mara Rosa project was awarded its main (LP) permit which provides the social and environment permission to mine. Amarillo is progressing toward obtaining an installation permit (LI).
Mike Mutchler, the president and chief executive officer of the company, is a qualified person as defined by National Instrument 43-101 guidelines, and has reviewed and approved the scientific and technical disclosure in this news release.
We seek Safe Harbor.
© 2018 Canjex Publishing Ltd. All rights reserved.