Mr. Sokhie Puar reports
CANDELARIA MINING COMPLETES UNITS AND CONVERTIBLE NOTES FINANCING
Candelaria Mining Corp. has completed its private placement offering previously announced on July 8, 2016, for total proceeds of $6.25-million.
Pursuant to the offering, the company issued a total of 20 million units at a price of 15 cents per unit for gross proceeds of $3-million. Each unit consists of one common share of the company and one-half of one non-transferable share purchase warrant. Each whole warrant entitles the holder to acquire one additional common share of the company at a price of 25 cents per common share for a period of 18 months following closing.
Pursuant to the offering, the company also issued $3.25-million (equivalent to $2.5-million (U.S.)) of unsecured convertible notes. The convertible notes will bear interest at 6 per cent annually, paid monthly and have a maturity date of Aug. 18, 2018, and the principal amount of the convertible notes is convertible into units for a period of 24 months at 15.5 cents per unit prior to the maturity date. Each unit will comprise one common share and one-half of one common share purchase warrant of the issuer. Each whole warrant will entitle the holder thereof to purchase one additional common share for a period of 18 months at an exercise price of 25 cents per share.
Cash finders' fees of $75,540 (U.S.) were paid in connection with the offering. Proceeds of the offering are allocated to the advancement of the Caballo Blanco project and general working capital.
All securities issued in connection with the offering (including all securities issued upon exercise of those securities) are subject to a four-month hold period expiring on Dec. 19, 2016, as prescribed by the TSX Venture Exchange and applicable securities laws.
Pursuant to the offering, Javier Reyes of Mexico City purchased $3.25-million (equivalent to $2.5-million (U.S.)) worth of unsecured convertible debentures. Immediately prior to the offering, Mr. Reyes held 30.54 million common shares of the company, representing approximately 12.7 per cent of the issued and outstanding shares of the company on an undiluted basis. Of these common shares, 27.7 million are owned by Credipresto SA de CV Sofom, and 2.84 million of these common shares are owned by Antares Capital Fund Ltd., a company controlled by Mr. Reyes. The convertible notes he acquired are convertible into up to 20,967,741 common shares of the company and 10,483,870 warrants. As a result of the foregoing acquisition (assuming full conversion of the convertible notes and full exercise of the warrants issued upon conversion of the convertible notes), Mr. Reyes would own and/or control a total of 61,991,611 common shares of the company, representing 22.1 per cent of the issued and outstanding shares on a partially diluted basis, assuming no further common shares of the company have been issued.
Mr. Reyes also holds common share purchase warrants exercisable into up to three million common shares of the issuer, and $1,625,000 worth of unsecured convertible debentures convertible into up to 27,083,333 common shares of the issuer at a price of six cents per common share in the first year and 10 cents per common share for the remainder of the term. If Mr. Reyes were to exercise all of the share purchase warrants and convert all the unsecured convertible debentures and convertible notes, he would then control a total of 92,074,944 common shares of the issuer, representing approximately 30.61 per cent of the issued and outstanding common shares of the issuer on a partially diluted basis assuming that no other common shares of the issuer have been issued.
Mr. Reyes acquired the convertible notes for investment purposes and has no present intention to acquire further securities of the company, although he may, in the future, participate in financings and/or acquire or dispose of securities of the company in the market, privately or otherwise, as circumstances or market conditions warrant. The convertible notes were issued to Mr. Reyes in reliance upon the prospectus exemption in Section 2.3 of National Instrument 45-106 -- Prospectus Exemptions on the basis that he meets the criteria of an accredited investor (as defined in National Instrument 45-106).