Tanzania: Over 17 Billion Set Aside for new Investment Venture
Posted on : Tuesday, 16th December 2014
SOME 10 million US dollars (17.22bn/-) has been closed in escrow and up to 3,642,857 common share purchase warrants for an institutional lender that will provide money to develop Buckreef gold mine project jointly owned by Tanzanian Royalty Exploration Corporation (TRX) and State Mining Corporation (Stamico).
In a statement issued, TRX Chief Executive Officer, James Sinclair said the facility may be increased to 15 million US dollars (25.83bn/-) subject to financial criteria.
"The company will apply the proceeds of this financing to complete the final 10 per cent of construction of the first phase of its Buckreef gold mine and to add to its working capital," the news release stated.
Mr Sinclair said, "In light of the difficult market conditions affecting our industry, we are particularly proud of this financing which will be sufficient to complete the construction of phase I of our Buckreef project and increase our working capital. We are excited about finalizing our plans for phase II."
"On the heels of our consistently successful drilling activities at Buckreef, this capital will allow TRX keep its development plan on track," said Joseph Kahama who is Chief Operating Officer of TRX.
"With the many challenges facing gold companies, this is an opportune time to purchase machinery and hire skilled local workers and contractors," Mr Kahama noted.
The notes are issuable at an 8 per cent discount, with an initial funding amount of 9.2 million US dollars with the closing drawdown at 2.75 million US dollars, subject to adjustment downward based on the ratio of $0.85 to the lowest daily volume-weighted average trading price of the shares up to December 24, 2014.
Subsequent draw-downs may be made based on meeting certain financial ratios. The notes bear interest at 8 per cent per annum, payable monthly.
The notes mature in 24 months and are pre-payable at the option of the company after six months and the lender may redeem 7.5 per cent of principal monthly commencing in March, 2015 payable in cash or shares at the option of the company (at a price based on 90 per cent of the then-current volume weighted average trading price).
Final closing of the financing out of escrow is subject to the approval of the New York Stock Exchange market and the Toronto Stock Exchange, and to the lender being satisfied that no intervening material adverse change has occurred. Forefront Capital acted as Placement Agent.
