Proceeds to fund development of Texas project, buy back of silver contract
New York, Nov. 19 - Aurcana Corp. announced that it has agreed up to C$85 million of equity and debt financings.
The company will sell at least C$50 million and up to C$60 million of units and $25 million of notes with warrants in two tranches.
For the equity financing, Aurcana has agreed with agent Sunel Securities Inc. on a best efforts sale of equity units at C$0.31 each. Each unit will be made up of one share and half a warrant. Whole warrants will be exercisable at C$0.41 per share for 36 months.
Sunel will receive a 7% commission and receive options for 7% of the number of units sold exercisable at C$0.41 each for 24 months. The units will consist of one share and half a warrant, with whole warrants exercisable for 24 months at C$0.41 each.
Proceeds from the units will be used to fund capital expenditures on Aurcana's Shafter project in Texas, for general corporate purposes and to fund the buyback of the company's silver purchase agreement with a subsidiary of Silver Wheaton Corp. for $25 million plus the outstanding silver balance owing.
The debt financing is in two parts, $12.5 million of senior secured notes with Sprott Asset Management LP on behalf of certain Sprott funds and a $12.5 million senior secured debt financing with Sprott Resource Lending Partnership.
The financing with Sprott Resource Lending will be in two tranches, $5 million at closing and $7.5 million at the company's request once conditions are met.
The entire note financing will be available at the company's request, again once conditions are met.
The debt financing will be payable in quarterly installment starting June 30, 2011 and ending Dec. 31, 2013. The notes will be payable in quarterly installments starting March 31, 2012 and ending Dec. 31, 2013.
Sprott Asset Management and Sprott Resource Lending will each receive 6 million warrants exercisable for 24 months at C$0.50 per share. Each will also receive a $625,000 bonus payment, payable in cash or stock, on closing of the initial advance.
For the notes, Aurcana will deliver the cash equivalent of 830,000 ounces of silver priced at the previous day's Bloomberg composite close over the term that the debt is outstanding.
For the debt financing, Aurcana will deliver the cash equivalent of 830,000 ounces of silver priced at the previous day's Bloomberg composite close, multiplied by the lesser of the previous day's closing spot rate and $19.00, again over the term that the debt is outstanding. The investor will also receive 50% of any amount by which the closing spot price is greater than $23.00, multiplied by the number of ounces.
Aurcana has guaranteed a minimum rate of return of 5% on both debt financings.
The company will also pay a 2% commission to the agent on closing of the initial tranche.
The first tranche of the debt financing is expected to close by Dec. 15.
Proceeds from the notes and debt will be used to fund the development of Aurcana's Shafter silver project in Texas through production. The company will grant the investors security over substantially all of its properties and assets.
"Upon the successful closing of these financings, Aurcana will be fully funded to take Shafter into production, and construction of the Shafter project will begin immediately," said Lenic Rodriguez, company president, in a news release.
"These financings will also allow Aurcana to buy back the 50% life-of-mine silver stream from a wholly owned subsidiary of Silver Wheaton which will greatly improve the cash flow from the La Negra mine. Once completed Aurcana will have a clear path to becoming a 5 million ounce plus mid-tier silver producer."
Aurcana is a Vancouver, B.C., silver and base metals producer.
| Issuer: | Aurcana Corp.
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| Amount: | Up to C$60 million, $25 million
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| Announcement date: | Nov. 19
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| Agent: | Sunel Securities Inc.
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| Stock symbol: | TSX Venture: AUN
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| Stock price: | C$0.47
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| Capitalization: | C$59.49 million
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|
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| Units
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| Amount: | Up to C$60 million, minimum C$50 million
|
| Price: | C$0.31
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| Warrants: | 0.5 per unit
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| Warrant strike price: | C$0.41
|
| Warrant expiration: | 36 months
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| Settlement: | Nov. 30
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|
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| Senior secured notes
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| Amount: | $12.5 million
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| Maturity: | Dec. 31, 2013, amortizes in quarterly installments starting March 31, 2012
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| Coupon: | Cash equivalent of 830,000 ounces of silver priced at the previous day's Bloomberg composite close, guaranteed minimum rate of return of 5%
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| Warrants: | For 6 million shares
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| Warrant strike price: | C$0.50
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| Warrant expiration: | 24 months
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| Investor: | Sprott Asset Management LP
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|
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| Senior secured debt financing
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| Amount: | $12.5 million
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| Maturity: | Dec. 31, 2013, amortizes in quarterly installments starting June 30, 2011
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| Coupon: | Cash equivalent of 830,000 ounces of silver priced at the previous day's Bloomberg composite close, multiplied by the lesser of the previous day's closing spot rate and $19.00, again over the term that the debt is outstanding; also receive 50% of any amount by which the closing spot price is greater than $23.00, multiplied by the number of ounces; guaranteed minimum rate of return of 5%
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| Warrants: | For 6 million shares
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| Warrant strike price: | C$0.50
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| Warrant expiration: | 24 months
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| Investor: | Sprott Asset Management LP
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