Highlights
- Unique structure that may become standard for gold development funding
- 20% of debt value covered by warrants
- Buyers of the debt benefit from gold prices above $1,800/oz
- Offers upside to gold prices and pays 12% annual interest
West Red Lake Gold Mines Ltd. (TSXV: WRLG) (OTCQB: WRLGF), announced that it has entered into an agreement with Raymond James Ltd. to act as sole bookrunner and lead agent, on behalf of a syndicate of agents (together, the “Agents”), in connection with a marketed “best efforts” private placement of units of the Company (each, a “Unit”) at a price of US$1,000 per Unit (the “Offering Price”) for gross proceeds of US$20,000,000 (the “Offering”). The Agents will have the option to sell up to an additional 15% of the Units offered, exercisable, in whole or in part, at any time up to 48 hours prior to the Closing Date (as defined below) to cover over-allotments, if any.
Each Unit will contain gold-linked notes in the aggregate principal amount of US$1,000 (the “Notes”) and 710 common share purchase warrants (the “Warrants”). Each whole Warrant will entitle the holder to purchase one common share of the Company (collectively, the “Common Shares”) at an exercise price of C$0.95 per share for a period of 60 months following the closing of the Offering.
The Notes will represent senior unsecured obligations of the Company. The Notes will 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.
Frank Giustra, who holds 11.07% of the outstanding Common Shares, has indicated his intent to participate in the Offering by subscribing for 3,700 Units representing US$3.7 million in gross 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.
The Units may be offered: (i) in Canada, to “accredited investors” in each of the provinces and territories of Canada; (ii) in the United States, to “qualified institutional buyers” (QIBs) and “accredited investors”, as defined in Rule 144A(a)(1) and Rule 501(a) of Regulation D, respectively, under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”). The. The Units may be distributed in jurisdictions outside of Canada and the United States in such jurisdictions as the Company and the Agents may agree, where they may be lawfully sold on a basis exempt from the prospectus, registration and similar requirements of any such jurisdiction.
All securities issued in connection with the Offering will be subject to a four-month and one day hold period from the Closing Date. Subject to meeting minimum listing requirements, the Company will use commercially reasonable efforts to list the Notes and Warrants following the statutory hold period. There can be no assurance that a listing for the Notes or the Warrants will be obtained.
The Offering is expected to close on or about March 19, 2024 (the “Closing Date”), subject to customary closing conditions, including the approval of the TSX Venture Exchange.
