West Red Lake Officially Closes $27 Million Gold Linked Notes Offering

West Red Lake Gold Mines Ltd. (TSXV: WRLG) (OTCQB: WRLGF) announced that, further to its news releases of February 27, 2024, March 1, 2024, and March 20, 2024, the company has closed a second and final tranche (the “Second Tranche”) of its private placement (the “Offering”) of gold linked notes (the “Notes”), bringing the total value of Notes issued to US$27,165,631 (after issuance of the Debt Conversion Units described below).

The Company issued an additional 1,924 units (the “Offering Units”) under the Second Tranche, at a price of US$1,000 per Offering Unit, for gross proceeds of US$1,924,000. Each Offering Unit contains Notes in the aggregate principal amount of US$1,000 and 710 common share purchase warrants (the “Warrants”). Each whole Warrant entitles the holder to purchase one common share of the Company at an exercise price of C$0.95 per share until March 19, 2029.

The Notes represent unsecured obligations of the Company, bear a 12% per annum coupon, calculated and payable quarterly in arrears, and will mature on December 31, 2029. Commencing January 1, 2026, the Company will cause gold to be placed in escrow on a quarterly basis into a gold trust account. The aggregate principal amount of Notes outstanding will be reduced by the Company on a quarterly basis, commencing on March 31, 2026, and with the final payment on December 31, 2029, in accordance with the payment schedule to be set forth in the indenture that will govern the Notes. The Notes will amortize based on a guaranteed floor price of US$1,800 per ounce of gold (the “Floor Price”). Any excess proceeds by which the gold price exceeds the Floor Price will be paid to investors as a premium.

Use of Proceeds

The net proceeds of the Offering are expected to be used to continue to advance the development of a restart plan for the Madsen Gold Mine as well as for working capital and general corporate purposes.

Subject to meeting minimum listing requirements, the Company will use commercially reasonable efforts to list the Notes and Warrants issued pursuant to the Offering and underlying the Debt Conversion Units described below, following the statutory hold period. There can be no assurance that a listing for the Notes or the Warrants will be obtained, or, if obtained, that a liquid market will develop for either.

Deferred Consideration Payment to Sprott

Further to an unsecured convertible promissory note dated December 14, 2023 in the amount of US$2,901,631 (the “Obligation”), representing deferred consideration owed by the Company to a fund managed by Sprott Resource Lending Corp (“Sprott”) related to the acquisition of Pure Gold Mining Inc., the Company and Sprott have agreed to amend the Obligation to provide for the conversion of the US$2,901,631 owed under the Obligation into 2,901.631 units (the “Debt Conversion Units”) having the same terms as the Offering Units.

MI 61-101 and TSX-V Disclosure

Certain insiders of the Company (“insiders”) acquired Offering Units and as such the Second Tranche is considered a related party transaction with the meaning of TSX Venture Exchange (“TSX-V”) Policy 5.9 and Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Since Sprott is an insider, the amendment of the Obligation also constitutes a related party transaction. The Company is relying upon the exemption from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of the securities acquired, nor the consideration paid for such securities, exceeds 25 per cent of the Company’s market capitalization. The Company did not file a material change report more than 21 days before the expected closing of the Offering because the details of the participation therein by related parties of the Company were not settled until shortly prior to closing of the Offering and the parties wished to close on an expedited basis for business reasons.

Issuance of the Offering Units and Debt Conversion Units is subject to final approval of the TSX-V, and all securities issued in connection with the Offering and under the amended Obligation will be subject to a four-month and one day statutory hold period in accordance with applicable securities laws and the policies of the TSX-V.

The first tranche of the Offering was completed pursuant to an agency agreement entered into between the Company and a syndicate of agents led by Raymond James Ltd. (the “Agents”). The Company has agreed to pay to the Agents a cash fee of US$57,720 in respect of the Units issued under the Second Tranche and US$29,016 in respect of the issuance of the Debt Conversion Units.

Duane Hope is a Partner at Capital 10X, he brings over 15 years of communications and research experience to the firm. His research and writing have appeared in publications for North American, European and Asian audiences.


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